Introduction
Overview of Celo Governance
Celo Governance is a formal on-chain mechanism that allows stakeholders to manage and upgrade the protocol, including smart contracts, stable currencies, and reserve target asset allocation. This structure enables anyone to shape the direction of the Celo community and contribute to the operation and longevity of the protocol.
Importance of Governance in the Celo Ecosystem
Governance plays a crucial role in the Celo ecosystem, as it allows for community-driven decision-making and ensures that the network remains adaptable and responsive to the needs of its users. By involving stakeholders in the decision-making process, Celo Governance fosters a sense of ownership and responsibility among the community, ultimately leading to a more robust and sustainable blockchain network.
Governance Process
The governance process in Celo consists of four main phases: Proposal, Approval, Referendum, and Execution. Each phase plays a critical role in ensuring that proposed changes to the protocol are thoroughly vetted and receive adequate support from the community before being implemented.
Proposal Phase
In the Proposal phase, any user can submit a Celo Governance Proposal (CGP) to the Governance smart contract, along with a small deposit of CELO. This deposit is required to prevent spam proposals and is refunded to the proposer if the proposal reaches the Approval stage. A proposal consists of a list of transactions and a description URL where voters can get more information about the proposal. It is encouraged that this description URL points to a CGP document in the celo-org/celo-proposals repository.
Approval Phase
During the Approval phase, the top three proposals with the highest number of upvotes from Locked CELO holders are dequeued and moved into this phase. At this time, the original proposers are eligible to reclaim their Locked CELO deposit. In this phase, the proposal needs to be approved by the Approvers, a 3 of 9 multi-signature address held by individuals selected by the Celo Foundation, which will eventually move to a DAO in the future. The Approval phase lasts 1 day, and if the proposal is not approved in this window, it is considered expired and does not move on to the “Referendum” phase.
Referendum Phase
Once the Approval phase is over, approved proposals graduate to the Referendum phase. In this phase, any user may vote yes, no, or abstain on the proposals. Their vote’s weight is determined by the weight of their Locked CELO. The Referendum phase lasts five days, after which each proposal is marked as passed or failed as a function of the votes and the corresponding passing function parameters.
Execution Phase
The final phase in the governance process is the Execution phase. In this phase, the proposal creator is generally responsible for implementing the proposal when it passes the referendum. The proposal must be executed within 3 days of passing the referendum, and it is executed using the Celo CLI.
By following this structured process, Celo Governance ensures that proposed changes to the protocol are carefully considered and receive the necessary support from the community before being implemented.
Major Governance Proposals
CGP #1: Carbon Offsetting
One of the most significant Celo Governance Proposals (CGP) to date is CGP #1, which focused on carbon offsetting. Launched in April 2020, this proposal made the Celo platform carbon-negative by allocating 0.1% of block rewards to the on-chain Carbon Offsetting Fund. This commitment to the environment has set the Celo platform apart in the regenerative finance (ReFi) space.
Partnership with Project Wren
To implement CGP #1, Celo partnered with Project Wren, a platform that purchases carbon offsets for tech-enabled rainforest protection in the Peruvian Amazon and community tree planting in Kenya, Uganda, and Tanzania. To date, 3,844.8 tons of CO2 have been automatically offset by Project Wren on behalf of the Celo Platform, greatly exceeding the estimated 247.7 tonnes of CO2 emitted by the network by a factor of 15.5x.
Impact on Celo’s Carbon Footprint
The implementation of CGP #1 has had a significant impact on Celo’s carbon footprint, making the platform carbon-negative from inception. This commitment to the environment has not only set Celo apart in the ReFi space but also demonstrated the potential for blockchain technology to contribute positively to global sustainability efforts.
Update on Carbon-Offsetting Mechanism
A recent proposal to update Celo’s carbon-offsetting mechanism was raised by Spirals Protocol, Mercy Corps Ventures, and the Climate Collective. The proposal aims to increase transparency, accountability, and liquidity in the carbon-offset market by reallocating a portion of the Carbon Offsetting Fund to on-chain offsets offered by the Toucan Protocol through its TCO2 tokens.
Proposal by Spirals Protocol, Mercy Corps Ventures, and Climate Collective
The proposal suggests a phased approach to reduce the epoch rewards going towards Wren and redirect them towards retiring high-quality TCO2 tokens each month. This change aims to prove out a system for utilizing on-chain offsets and establish initial guidelines for future governance proposals to include new assets and adjust percentage allocations.
LatAm W3 DAO Proposal
Another major governance proposal is the LatAm W3 DAO Proposal, which aims to spread awareness and grow the Celo community in Latin America. This proposal focuses on fostering collaboration and engagement among Celo users, developers, and stakeholders in the region, ultimately contributing to the growth and adoption of the Celo platform.
Uniswap V3 Deployment on Celo
A proposal to deploy Uniswap V3 on Celo aims to launch “Green Asset” Liquidity Pools and expand access to Uniswap to 6 billion smartphone users. By integrating Uniswap V3 with Celo, the proposal seeks to create new opportunities for users to access decentralized financial tools and services, further promoting the growth and adoption of the Celo platform.
Future Developments in Celo Governance
As the Celo platform continues to evolve, governance proposals will play a crucial role in shaping its future direction and ensuring that it remains responsive to the needs of its users. Several key developments are expected to impact Celo Governance in the coming months and years.
Quality Assessment Framework for On-Chain Offsets
One of the most significant developments in Celo Governance is the creation of a quality assessment framework for on-chain offsets. The Climate Collective and Rocky Mountain Institute are collaborating to develop this framework, which will help evaluate the quality of on-chain offsets and provide guidance for future governance proposals that include new assets and adjust percentage allocations.
The timeline for the development and implementation of this quality assessment framework includes the establishment of the Celo Carbon Neutrality Multisig (CCNM) system in April 2023, the launch of the Celo carbon accounting dashboard with cLabs, the publication of the quality assessment framework by June 2023, and the start of using the framework for asset proposals from July 2023 onwards.
Community-Driven Decision-Making
Another key development in Celo Governance is the ongoing emphasis on community-driven decision-making. By involving stakeholders in the decision-making process, Celo Governance fosters a sense of ownership and responsibility among the community, ultimately leading to a more robust and sustainable blockchain network.
As more users, developers, and stakeholders join the Celo ecosystem, it is essential to continue promoting community involvement in governance proposals. This will ensure that the platform remains adaptable and responsive to the needs of its users, while also fostering a sense of shared responsibility for the network’s success.
In conclusion, the impact of governance proposals on the Celo blockchain network is significant, as they shape the platform’s future direction and ensure its responsiveness to user needs. By fostering community-driven decision-making and enabling stakeholders to contribute to the operation and longevity of the protocol, Celo Governance will continue to play a vital role in the ongoing success of the Celo blockchain network.
Conclusion
Impact of Governance Proposals on the Celo Blockchain Network
Governance proposals have played a crucial role in shaping the Celo blockchain network and ensuring its responsiveness to user needs. Major proposals, such as CGP #1 for Carbon Offsetting and the LatAm W3 DAO Proposal, have demonstrated the potential for community-driven decision-making to contribute positively to global sustainability efforts and foster collaboration and engagement among Celo users, developers, and stakeholders. By enabling stakeholders to contribute to the operation and longevity of the protocol, Celo Governance has helped create a more robust and sustainable blockchain network.
Ongoing Evolution of Celo Governance
As the Celo platform continues to evolve, governance proposals will remain an essential tool for shaping its future direction and ensuring that it remains responsive to the needs of its users. Key developments, such as the creation of a quality assessment framework for on-chain offsets and the ongoing emphasis on community-driven decision-making, will further strengthen the role of Celo Governance in the ongoing success of the Celo blockchain network.
The impact of governance proposals on the Celo blockchain network is significant, as they shape the platform’s future direction and ensure its responsiveness to user needs. By fostering community-driven decision-making and enabling stakeholders to contribute to the operation and longevity of the protocol, Celo Governance will continue to play a vital role in the ongoing success of the Celo blockchain network.